You are currently browsing the category archive for the ‘Financial Inclusion’ category.
> Posted by Caitlin Sanford, Lanna Lome-Ieremia, and Sameer Chand, Bankable Frontier Associates, Central Bank of Samoa, and Reserve Bank of Fiji
Another version of this post is published on the Alliance for Financial Inclusion website.
Until now there have been few sources of publicly available data about financial access and usage in the Pacific Islands. Although individual central banks are measuring and tracking progress towards financial inclusion, the small island countries in the Pacific region have often been left out of international financial inclusion datasets, such as the Global Findex. The IMF Financial Access Survey captures some key financial inclusion indicators but this does not include all the countries from the Pacific.
The Pacific Islands Working Group on financial inclusion (PIWG) of the Alliance for Financial Inclusion came together this year to define and collect financial inclusion data specifically tailored to the region. Fiji, Papua New Guinea, Samoa, Solomon Islands, and Vanuatu participated in this data project. While the Alliance for Financial Inclusion (AFI) and the Global Partnership for Financial Inclusion (GPFI) have elaborated key sets of financial inclusion indicators to be used for global comparison, in some instances, individual countries such as Mexico, Brazil, Tanzania, and others have crafted broader sets of country-level indicators. This is the first time a broader set of common indicators have been developed at a regional level.
> Posted by Amanda Lotz, Financial Inclusion 2020 Consultant, CFI
On October 28, Alexia Latortue of the U.S. Treasury moderated the opening plenary of the Financial Inclusion 2020 Global Forum featuring two leaders in microinsurance, Michel Khalaf of MetLife and Martyn Parker of Swiss Re. One of Alexia’s remarks at the Global Forum deeply resonates with me today: “The occurrence of a risk event can set a family back an entire generation.” Among other things, she suggested, there are new and emerging risks linked to climate change.
Shortly after the Forum, we saw haunting evidence of this. On November 8, Typhoon Haiyan devastated much of the Visayas region in the Philippines, with the city of Tacloban being the hardest hit. Typhoon Haiyan is a reminder of why we must prepare to face natural disasters. Microinsurance is one form of advance preparation that can prove instrumental in the disaster rebuilding stage.
In a disaster prone country such as the Philippines, where over 41 percent of the population lives on under $2 per day, ensuring greater access to microinsurance could make an enormous impact. In the country’s rural areas, which encompass roughly half of Filipinos and about 80 percent of those living in poverty, agriculture is the primary source of income. Government data from 2009 indicates that poverty among fishermen is at 41 percent, with farmers close behind at 36 percent. Think about the opportunities for providing microinsurance to farmers and fishers, whose livelihoods and families depend on productive land and assets that can be tremendously affected by weather!
> Posted by Aparna Dalal and Craig Churchill, International Consultant and Team Leader, Microinsurance Innovation Facility, International Labour Organization
New impact evidence shows that microinsurance products can provide financial protection, reduce vulnerability, and improve access to critical services for low-income households. And with innovations in product and delivery, more people now have access to microinsurance. The sector grew from an estimated 78 million clients in 2007 to 135 million in 2009, to 500 million in 2012. Does this mean that microinsurance has finally arrived?
The answer depends on where you look. While we have seen breakthroughs in certain countries (such as India, the Philippines, South Africa, and Colombia), glaring geographic disparities in coverage persist, with vast deserts without coverage amid oases of success. Common challenges facing countries with low coverage include inappropriate regulation, lack of capacity within the insurance industry, lack of infrastructure for distribution, limited data, and insufficient knowledge of insurance among low-income households.
These challenges vary with market maturity. For instance, insurers in a country in the nascent stage of development might have limited capacity to offer mass products beyond credit-life and they often have to develop marketing strategies and distribution infrastructure from the ground-up. They must find ways to reach persons who are unfamiliar with insurance. In contrast, insurers in growing markets are looking for new distribution partners and developing more customized products to address specific client needs.
A systematic approach is needed for countries to address these challenges and accelerate the development of insurance markets. This approach includes two core elements: 1) catalyzing stakeholders and 2) evolving products.
> Posted by Center Staff
After eight programs spanning over 500 participants from roughly 100 countries, we are proud to announce that the annual executive education program jointly run by Harvard Business School (HBS) and Accion is now accepting applications for 2014. The program will take place April 21-26, 2014 at the HBS campus in Cambridge, Massachusetts.
This year, the program has a new name. It is now the HBS-Accion Program on Strategic Leadership in Inclusive Finance. This name change confirms a shift in course focus and approach that has been underway for some time, from an exclusive focus on microfinance to a broader financial inclusion scope.
Today’s financial inclusion landscape is changing rapidly, as new entrants, disruptive business models, and deeper understanding of client needs all challenge conventional wisdom. It is an exciting time, with new possibilities for reaching more people with an increasing array of financial services. For leaders steering their organizations through this landscape, the pace and magnitude of change may look overwhelming. In this program senior financial service providers will benefit from the guidance of some of the world’s best business minds to better understand the possibilities and the pitfalls of a more complex financial services marketplace. Policymakers, regulators, and investors will find it valuable to get a closer look at how the industry is evolving in countries around the world.
> Posted by Center Staff
The FI2020 Global Forum in London gets underway this Sunday with a pre-Forum side meeting on financial inclusion for persons with disabilities (PWDs). This client-centric start feels like a fitting precursor for an event to expand financial inclusion.
Financial inclusion requires that financial services meet the unique needs of all clients, especially the needs of the most underserved and vulnerable client groups. Sessions throughout the Forum reflect this key tenet. In addition, there are side meetings on the Financial Capability Roadmap and the Consumer Protection Roadmap, focused on moving these roadmap principles and recommendations to action. These and the other three financial inclusion roadmaps were developed through a consultative process that collected and incorporated the perspectives of specific client groups.
Among Forum participants are representatives of various client segments – such as PWDs, women, the elderly, youth, rural populations, and migrants – to help raise awareness of their unique needs and assets. Here’s a collection of pertinent statistics for financial inclusion on these client segments:
- 1.8 billion of the world’s population is between the ages of 10 and 24
- 87 percent of youth are concentrated in the developing world
- About half the world’s youth report being economically active
- 38 percent of young adults have an account compared to over 54 percent of older adults
- In 1950, globally, 1 in 20 people were elderly. By 2050, it will be 1 in 5.
- In 2000, only 6 percent of people in less developed countries were over 65 years old. By 2050, that number will grow to 20 percent.
> Posted by Tilman Ehrbeck, CEO, CGAP
The following post was originally published on the CGAP Blog.
World leaders are embracing financial inclusion at an accelerating pace. In May, the UN High-Level Panel chaired by Liberia‘s President Johnson Sirleaf, Indonesia’s President Bambang Yudhoyono, and the UK’s Prime Minister David Cameron, presented the recommendations for the post-2015 UN Development Goals, which included universal access to financial services as a critical enabler for job creation and equitable growth. In September, the G20 reaffirmed its commitment to financial inclusion as part of its development agenda. And most recently, during the IMF/World Bank Annual Meetings earlier this month, World Bank President Jim Kim called for collective action to reach universal financial access by 2020.
World leaders do this because they know that an inclusive financial system that responsibly reaches all citizens is an important ingredient for social and economic progress for emerging markets and developing countries. At the microeconomic level, it helps poor households and small businesses generate income, build assets, smooth consumption, and better manage risks. At the macroeconomic level, the depth of financial intermediation under most circumstances spurs growth and reduces inequality. An inclusive financial system also helps governments to better execute social policy in other priority areas such as education and health, for example through more targeted financial transfers.
> Posted by Elisabeth Rhyne, Managing Director, CFI
The following post was originally published on the World Bank Private Sector Development Blog.
The issue of financial inclusion seems to be everywhere – from the World Bank Annual Meetings to the new UN post-2015 development goals. It’s got buzz in the private sector, public sector and development organizations big and small. Policymakers are increasingly making financial inclusion a priority through specific financial inclusion targets and commitments, such as the Alliance for Financial Inclusion’s Maya Declaration. In fact, World Bank Group President Jim Yong Kim recently launched an initiative “to provide universal financial access to all working-age adults by 2020.”
As we know from the Global Findex, more than 2.5 billion people lack access to even a basic bank account — a huge gap in inclusion and an enormous opportunity. Demographic changes, economic growth, and advances in technology are making global financial inclusion more possible than ever before. With a massive new market of people demanding new services as incomes rise among the bottom 40 percent, the stage is set for dramatic leaps in access in the next few years. Emerging technologies are bringing down costs and opening new business models while providing greater access to a range of services.
Recognizing that the time is ripe for significant progress on financial inclusion, the Center for Financial Inclusion developed a consultative process aimed to raise everyone’s sights about the possibilities of achieving full inclusion within a foreseeable timeframe – using the year 2020 as a focal point. The process sought to build a more cohesive financial inclusion “community” through the development of a common vision. It brought together experts from the World Bank, IFC, and CGAP along with many representatives of the private sector and the social sector. Financial Inclusion 2020’s Roadmap to Financial Inclusion is the result.
With all of the financial inclusion buzz, you would think that we would be closer to full inclusion. But if closing the gaps were easy, it would have happened already. Many factors still stand in the way. In the case of regulatory accommodation to new technology, for example, the gaps result from such factors as the pace of the spread of know-how among policymakers globally, national legislative and political processes, and uncertainty about the risks involved with new models. In the case of fully addressing the needs of customers at the base of the pyramid (BOP), gaps stem from a combination of doubt among providers about the likely profitability of these customers and limited knowledge inside institutions about the financial lives of the poor. In the case of client protection, providers face perverse incentives, while many regulatory bodies are only beginning the major task of establishing robust oversight of market conduct.
We see encouraging examples of financial inclusion in the most remote corners of the world, often done by surprising actors. However, the momentum is uneven. The Roadmap process included many of the thinkers and entrepreneurs behind such initiatives. Each of the five working groups — Addressing Customer Needs, Technology, Financial Capability, Client Protection and Credit Reporting — has developed a roadmap to direct the world community toward the actions most needed to achieve FI2020’s vision of full financial inclusion. Most of the recommendations are addressed either to governments or to providers, but they point the way to actions needed by a range of supporting organizations, including multilateral and bilateral organizations, donors, social investors and non-profits, at both the global and the national levels.
> Posted by Hemang Mandalia, Software Engineer, Investment Banking, Credit Suisse
The Financial Inclusion 2020 project at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”
This is the third in a series of several posts from this year’s Credit Suisse Virtual Volunteers, where research and insights across a variety of financial inclusion areas will be shared.
This brief tale begins with an investment scheme from a corporation called Sahara that claimed to seek “financial inclusion” through investments from the unbanked, but at the same time sought regulatory exclusion for its practices. Sahara provided investment opportunities to the rural nooks and corners of India that were overlooked by most major banks – but it is alleged to have falsified records and subverted Indian regulations.
Sahara India Pariwar is an enormous Indian conglomerate with headquarters in Lucknow, Uttar Pradesh. Its diversified business has interests in finance, infrastructure and housing, media, entertainment, retail, manufacturing, and information technology. Sahara has also been the main sponsor of the Indian national cricket team for several years, cricket being so popular it is often referred to as a religion. The link to cricket has helped Sahara establish itself as a household name.
Sahara’s financial services companies are said to have 100 million depositors and investors in villages and small towns, often from rural unbanked areas. As for the group’s investment products, Subrata Roy Sahara, chairman of Sahara, indicates they serve small investors who are outside the banking system.
> Posted by Center Staff
This edition of Top Picks features posts highlighting findings from new research on the global mobile money industry and on remittances in Africa and Asia, as well as a post on how innovation can encourage savings at the base of the pyramid.
A new post on GSMA’s Mobile Money for the Unbanked Blog shares preliminary findings from the MMU 2013 Global Mobile Money Adoption Survey. The Adoption Survey, which offers insights on the development of mobile money services and how they’re enabling the expansion of financial inclusion, will be published at the 2014 GSMA Mobile World Congress, February 24-27 in Barcelona. These preliminary findings included a few industry milestones. A few weeks ago the global industry surpassed 200 mobile money service deployments to total 208 services spread across 83 developing countries. Mobile money services are become a mainstay among mobile network operators, rather than a differentiator. In Sub-Saharan Africa, for example, mobile money is available in 36 out of the 47 countries in the region.
In Africa and Asia, domestic remittances may far surpass international remittances in both frequency and magnitude, two recent joint-reports from the Gates Foundation and Gallup found. That’s the subject of a new post on the Financial Access Initiative Blog, which details the reports’ key results and provides a brief overview of domestic remittances, internal migration, and how they relate. The reports revealed that across the 11 surveyed countries, 14 percent of people had sent money to family or friends within the country within the previous 30 days, and that 32 percent of these respondents had been on the receiving end of such a money transfer. In contrast, one to two percent of people reported sending an international remittance, and about three percent reported receiving an international remittance, in the previous 30 days.